The Ajay G. Piramal Foundation, New Delhi V. ADIT (E), New Delhi

ITA 6108/DEL/2012

• Counselvise Citation: 610820114 RSA 2012
• Duration Of Justice: 1 year(s) 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: H
• Next Hearing Date: 06-03-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 07-12-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SAMEER SHARMA
• Assessee Lawyers: YOGESH A THAR; ANKIT B AGRAWAL CAS
• Keywords: Charitable institution; Opportunity of being heard
• Section: 80G; 12A; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH H HH H : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND SHRI SHRI SHRI SHRI CHANDRA MOHAN GARG CHANDRA MOHAN GARG CHANDRA MOHAN GARG CHANDRA MOHAN GARG, ,, , JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ITA NO ITA NO ITA NO ITA NO. .. .6108/DEL/2012 6108/DEL/2012 6108/DEL/2012 6108/DEL/2012 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR : : : : 2009 2009 2009 2009- -- -10 1010 10 THE AJAY G. PIRAMAL THE AJAY G. PIRAMAL THE AJAY G. PIRAMAL THE AJAY G. PIRAMAL FOUNDATION, FOUNDATION, FOUNDATION, FOUNDATION, 320, TOWER 320, TOWER 320, TOWER 320, TOWER- -- -B, B,B, B, 11, DL 11, DL 11, DL 11, DLF TOWER, JASOLA, F TOWER, JASOLA, F TOWER, JASOLA, F TOWER, JASOLA, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 025. 110 025. 110 025. 110 025. PAN : AAATT1789N. PAN : AAATT1789N. PAN : AAATT1789N. PAN : AAATT1789N. VS. VS. VS. VS. ASSISTANT DIRECTOR OF INCOME TAX, ASSISTANT DIRECTOR OF INCOME TAX, ASSISTANT DIRECTOR OF INCOME TAX, ASSISTANT DIRECTOR OF INCOME TAX, TRUST CIRCLE TRUST CIRCLE TRUST CIRCLE TRUST CIRCLE- -- -IV, IV,IV, IV, NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI YOGESH A. THAR AND SHRI ANKIT B. AGRAWAL, CAS. RESPONDENT BY : SHRI SAMEER SHARMA, SR.DR. ORDER ORDER ORDER ORDER PER G. PER G. PER G. PER G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VP VPVP VP : : : : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF LEARNED CIT(A)-XXI, NEW DELHI DATED 3 RD SEPTEMBER, 2012 FOR THE AY 2009-10. 2. GROUND NOS.1 & 2 OF THE ASSESSEES APPEAL READ A S UNDER:- GROUND I : NOT GRANTING DEDUCTION OF INTEREST EXPE NSES. 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S)- XXI, NEW DELHI (THE CIT(A)) ERRED IN UPHOLDING TH E ACTION OF THE ASSISTANT DIRECTOR OF INCOME TAX (EXEMPTIONS ), TRUST CIRCLE-I DELHI, (THE A.O.) OF NOT GRANTING DEDUCT ION OF INTEREST EXPENSE AMOUNTING TO RS.1,41,75,000/- PAID ON LOAN TAKEN BY THE APPELLANT ON THE ALLEGED GROUND T HAT THE APPELLANT HAD MADE CERTAIN INVESTMENTS AND ADVANCED LOANS IN VIOLATION OF SEC 11 (5) R.W.S. 13(1)(D) OF THE INCOME TAX ACT, 1961 (THE ACT). ITA-6108/DEL/2012 2 2. THE APPELLANT PRAYS THAT THE DEDUCTION OF AFORES AID INTEREST EXPENSES BE ALLOWED. GROUND II : NOT GRANTING DEDUCTION U/S 80G OF THE A CT. 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LEARNED CIT(A) ERRED IN CONFIRMING THE ACT ION OF THE A.O. IN NOT GRANTING DEDUCTION OF RS.28,43,000/- U/ S 80G OF THE ACT ON THE ALLEGED GROUND THAT THE APPELLANT HA D MADE CERTAIN INVESTMENTS AND ADVANCED LOANS IN VIOLATION OF SECTION 11(5) R.W.S. 13(1)(D) OF THE ACT. 2. THE APPELLANT PRAYS THAT THE DEDUCTION U/S 80G O F THE ACT BE ALLOWED. 3. AT THE TIME OF HEARING BEFORE US, IT IS SUBMITTE D BY THE LEARNED COUNSEL THAT DURING THE ACCOUNTING YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESSEE WAS NOT ENTI TLED TO EXEMPTION UNDER SECTION 11 OF THE INCOME-TAX ACT, 1961 AND, T HEREFORE, THE ASSESSEE DID NOT CLAIM ANY SUCH EXEMPTION. THAT TH E ASSESSING OFFICER HAS ALSO HELD THAT THE BENEFIT OF SECTION 11 & 12 O F THE ACT IS DENIED TO THE ASSESSEE IN VIEW OF VIOLATION OF SECTION 13(1)( D) READ WITH SECTION 11(5) OF THE ACT. HE STATED THAT ONCE THE ASSESSEE HAS NOT CLAIMED EXEMPTION UNDER SECTION 11 AND THE ASSESSING OFFICE R ALSO HELD THAT THE ASSESSEE IS NOT ENTITLED TO ANY SUCH EXEMPTION, THE INCOME OF THE ASSESSEE IS TO BE ASSESSED UNDER THE NORMAL PROVISI ONS OF THE INCOME- TAX ACT AND NOT AS PER PROVISIONS OF SECTION 11 TO 13. HE STATED THAT THE MAIN SOURCE OF INCOME OF THE ASSESSEE IS INTERE ST INCOME WHICH IS REQUIRED TO BE ASSESSED UNDER THE HEAD INCOME FROM OTHER SOURCES. IN ADDITION, THERE IS SOME INCOME FROM CAPITAL GAIN WHICH IS TO BE ASSESSED UNDER THE HEAD CAPITAL GAINS. HE FURTHE R SUBMITTED THAT THE ASSESSING OFFICER DID NOT ALLOW THE DEDUCTION UNDER SECTION 80G AND HAS GIVEN NO FINDING FOR NOT CONSIDERING THE ASSESS EES CLAIM FOR DEDUCTION UNDER SECTION 80G. THE CIT(A) HELD THAT THE ASSESSEES CLAIM UNDER SECTION 80G CANNOT BE ENTERTAINED BECAU SE THE ASSESSEE ITA-6108/DEL/2012 3 IS NOT ELIGIBLE FOR EXEMPTION UNDER SECTION 11 & 12 . HE STATED THAT THE ALLOWABILITY OF DEDUCTION UNDER SECTION 80G IS NOT DEPENDENT UPON THE EXEMPTION UNDER SECTION 11 & 12. IN FACT, THE POSI TION WOULD BE OTHERWISE. IF AN ASSESSEE IS ENTITLED TO EXEMPTION UNDER SECTION 11 & 12, THE DONATION TO ANOTHER INSTITUTION WOULD BE CO NSIDERED AS APPLICATION OF FUNDS FOR CHARITABLE PURPOSES. THE EXEMPTION UNDER SECTION 80G IS TO BE ALLOWED IN THE CASE OF PERSONS WHO ARE NOT ENTITLED TO EXEMPTION UNDER SECTION 11 & 12. 4. LEARNED DR, ON THE OTHER HAND, RELIED UPON THE O RDERS OF AUTHORITIES BELOW AND HE STATED THAT THE ASSESSEE H AS VIOLATED THE PROVISIONS OF SECTION 13(1)(D) READ WITH SECTION 11 (5) OF THE ACT. THEREFORE, THE ASSESSING OFFICER HAS RIGHTLY HELD T HAT THE ASSESSEE IS NOT ENTITLED TO EXEMPTION UNDER SECTION 11 & 12. T HE ASSESSEE HAS NOT GIVEN ANY EXPLANATION FOR VIOLATION OF SECTION 13(1)(D) READ WITH SECTION 11(5) OF THE INCOME-TAX ACT. HE, THEREFORE , SUBMITTED THAT THE ORDER OF ASSESSING OFFICER WHICH IS SUSTAINED BY TH E LEARNED CIT(A) SHOULD BE UPHELD AND GROUND NOS.1 & 2 OF THE ASSESS EES APPEAL SHOULD BE REJECTED. 5. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF BOTH THE SIDES AND PERUSED RELEVANT MATERIAL PLACED BEFORE US. TH E ASSESSING OFFICER HAS RECORDED THE FINDING THAT THE ASSESSEE IS NOT E NTITLED TO EXEMPTION UNDER SECTION 11 & 12. THE ASSESSEE HAS NOT DISPUT ED SUCH FINDING IN APPEAL EITHER BEFORE THE CIT(A) OR BEFORE US. THER EFORE, NOW, ASSESSEES INCOME IS TO BE COMPUTED UNDER THE GENER AL PROVISIONS OF THE INCOME-TAX ACT WHICH ARE APPLICABLE IN THE CASE OF PERSONS WHO ARE NOT ENTITLED TO EXEMPTION UNDER SECTION 11 & 12. W E, THEREFORE, FIND MERIT IN THE CONTENTION OF THE LEARNED COUNSEL THAT THE INCOME OF THE ASSESSEE NEEDS TO BE COMPUTED UNDER THE VARIOUS PRO VISIONS OF THE INCOME-TAX ACT, VIZ., INCOME FROM OTHER SOURCES OR INCOME FROM CAPITAL ITA-6108/DEL/2012 4 GAINS, AS THE CASE MAY BE. WE, THEREFORE, SET ASID E THE ORDERS OF AUTHORITIES BELOW WITH REGARD TO GROUND NO.1 OF THE ASSESSEES APPEAL AND DIRECT THE ASSESSING OFFICER TO RECOMPUTE THE I NCOME OF THE ASSESSEE UNDER THE NORMAL PROVISIONS OF THE INCOME- TAX ACT. NEEDLESS TO MENTION THAT THE ASSESSING OFFICER WILL ALLOW AD EQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE WHILE RECOMPUTING TH E INCOME. 6. WITH REGARD TO GROUND NO.2, WE FIND THAT IN THE COMPUTATION OF INCOME, THE ASSESSEE LISTED THE DETAILS OF TOTAL DO NATIONS AMOUNTING TO ` 56,86,000/-. HOWEVER, NO DEDUCTION WAS CLAIMED BY THE ASSESSEE BECAUSE THE GROSS TOTAL INCOME AS PER ASSESSEE WAS LOSS. HOWEVER, IF WHILE RECOMPUTING THE INCOME THE ASSESSING OFFICER FINDS THAT THE GROSS TOTAL INCOME OF THE ASSESSEE IS IN POSITIVE F IGURE, THEN HE WILL CONSIDER THE ASSESSEES CLAIM FOR DEDUCTION UNDER S ECTION 80G IN ACCORDANCE WITH LAW. WE ALSO DO NOT AGREE WITH THE FINDING OF THE LEARNED CIT(A) THAT IF THE ASSESSEE IS NOT ELIGIBLE FOR EXEMPTION UNDER SECTION 11 & 12, HE IS NOT ELIGIBLE FOR DEDUCTION U NDER SECTION 80G. THE ASSESSEES WHO ARE NOT ELIGIBLE FOR EXEMPTION UN DER SECTION 11 & 12 ARE VERY WELL ELIGIBLE FOR DEDUCTION UNDER SECTI ON 80G. WITH THE ABOVE OBSERVATION, WE SET ASIDE THE ORDERS OF AUTHO RITIES BELOW WITH REGARD TO GROUND NO.2 AND DIRECT THE ASSESSING OFFI CER TO RECONSIDER THE ISSUE IN ACCORDANCE WITH LAW AS PER OUR OBSERVA TION ABOVE. 7. GROUND NO.3 OF THE ASSESSEES APPEAL READS AS UN DER:- GROUND III : NOT QUASHING THE PROPOSAL FOR WITHDRA WAL OF EXEMPTION/REGISTRATION U/S 12A/12AA OF THE ACT: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE CIT(A) ERRED IN NOT HOLDING THAT TH E PROPOSAL SENT BY THE AO TO HONBLE DIRECTOR OF INCOME-TAX (EXEMPTIONS), DELHI (DIT) FOR WITHDRAWAL OF EXEMPTION/REGISTRATION UNDER SECTION 12A/12AA OF TH E ACT ITA-6108/DEL/2012 5 OF THE APPELLANT, ON FACTS AND IN LAW, IS NOT CORRE CT AND BAD IN LAW. 2. THE APPELLANT PRAYS THAT THE PROPOSAL OF WITHDRA WING THE EXEMPTION/REGISTRATION U/S 12A/12AA SENT TO DIT BE HELD AS NULL AND VOID-AB-INITIO. 8. THE ABOVE GROUND NO.3 IS AGAINST THE OBSERVATION OF THE ASSESSING OFFICER AT PAGE 3 LAST PARAGRAPH OF THE A SSESSMENT ORDER IN WHICH THE ASSESSING OFFICER HAS MENTIONED A PROPOS AL FOR WITHDRAWAL OF EXEMPTION U/S 12A OF THE ACT IS BEING SENT TO THE DIT(E), DELHI SEPARATELY FOR CONSIDERING THE SAME.. IN OUR OPIN ION, IF THERE IS SOME CORRESPONDENCE BETWEEN THE ASSESSING OFFICER AND OT HER DEPARTMENTAL AUTHORITIES, THOUGH THE ASSESSING OFFICER HAS MENTI ONED THE SAME IN THE ASSESSMENT ORDER, IT WILL NOT BECOME AN APPEALA BLE ISSUE. CERTAINLY, IF THE DIT(EXEMPTIONS) WOULD LIKE TO TAK E ANY ACTION ON THE PROPOSAL OF THE ASSESSING OFFICER, HE WILL GIVE OPP ORTUNITY OF BEING HEARD TO THE ASSESSEE IN ACCORDANCE WITH LAW. MORE OVER, EVEN IF THE DIT(EXEMPTIONS) PASSED ANY ORDER WITHDRAWING THE EX EMPTION GRANTED TO THE ASSESSEE UNDER SECTION 12A/12AA, THE ASSESSE E WOULD BE AT LIBERTY TO TAKE APPROPRIATE ACTION AGAINST SUCH ORD ER IN ACCORDANCE WITH LAW. THUS, GROUND NO.3, BEING PREMATURE, NEED S NO ADJUDICATION AT THIS STAGE. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DEE MED TO BE PARTLY ALLOWED FOR STATISTICAL PURPOSES. DECISION PRONOUNCED IN THE OPEN COURT ON 7 TH MARCH, 2014. SD/- SD/- ( (( (CHANDRA MOHAN GARG CHANDRA MOHAN GARG CHANDRA MOHAN GARG CHANDRA MOHAN GARG) )) ) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT DATED : 07.03.2014 VK. ITA-6108/DEL/2012 6 COPY FORWARDED TO: - 1. APPELLANT : THE AJAY G. PIRAMAL FOUNDATION, THE AJAY G. PIRAMAL FOUNDATION, THE AJAY G. PIRAMAL FOUNDATION, THE AJAY G. PIRAMAL FOUNDATION, 320, TOWER 320, TOWER 320, TOWER 320, TOWER- -- -B, 11, DLF TOWER, JASOLA, B, 11, DLF TOWER, JASOLA, B, 11, DLF TOWER, JASOLA, B, 11, DLF TOWER, JASOLA, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 110 110 110 025. 025. 025. 025. 2. RESPONDENT : ASSISTANT DIRECTOR OF INCOME TAX, ASSISTANT DIRECTOR OF INCOME TAX, ASSISTANT DIRECTOR OF INCOME TAX, ASSISTANT DIRECTOR OF INCOME TAX, TRUST CIRCLE TRUST CIRCLE TRUST CIRCLE TRUST CIRCLE- -- -IV, NEW DELHI. IV, NEW DELHI. IV, NEW DELHI. IV, NEW DELHI. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR